A Good Deed Undone?

The Scrapbook

September 30, 2013, Vol. 19, No. 04

When it approved reforms to the National Flood Insurance Program (NFIP) last year, a normally spendthrift Congress showed that its members could work together and do the right thing for taxpayers. Majorities from both parties voted to end some of the program’s subsidies for vacation homes and “severe repetitive loss” properties (ones taxpayers have already paid to rebuild multiple times).

What a difference a year makes. As soon as it became clear that some constituents would have to shell out more for flood coverage, members of Congress reversed course. Indeed, even Rep. Maxine Waters, the Democratic coauthor of the reforms, has joined coastal-state conservatives like Sen. David Vitter of Lousiana in calling for a rollback. The House has already passed a measure that would gut the reforms, and in banking committee hearings on the subject last week, many senators appeared willing to join them.

If they have a single fiscally responsible bone in their bodies, members of Congress should stick to their guns. An unreformed NFIP provides something for everyone to dislike. Conservatives can rightly express outrage that the program collects $3.6 billion in premiums each year, owes over $25 billion to the Treasury, and displaces a potential private market. Liberals and environmentalists, likewise, have every reason to be outraged that the program still provides huge subsidies for developers to tear up environmentally significant areas and bestows its largest handouts on the already rich. Even if all of the promised reforms take force, furthermore, the NFIP will continue to provide huge subsidies for thousands of primary residences and will still need more reforms before it stands on a truly stable footing.

Any group that loses a subsidy will always make a lot of noise. A handful of people now facing higher flood insurance rates do have sympathetic stories to tell. But if members of Congress actually want to represent the public’s interest, they need to stay the course on flood insurance reform.